Oil prices that last week seemed on an inexorable path toward $100 a barrel slid more than $3 to the $91 level Tuesday after the International Energy Agency cut its demand forecasts and said crude supplies are rising.
Prices also fell after diplomats said Iran has handed over blueprints key to its nuclear program, meeting a central United Nations demand and potentially defusing the country’s standoff with the West.
“One of the reasons that we’ve been strong on oil all year is concerns about Iran’s nuclear program,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
Light, sweet crude for December delivery fell $3.45 to settle at $91.17 a barrel on the New York Mercantile Exchange. Only last Thursday, crude prices traded as high as $98.62, a record, and appeared headed for $100.
Retail gasoline prices, meanwhile, rose further above $3 a gallon Tuesday amid predictions prices will rise even more to catch up with oil’s recent advance to near $100 a barrel. The national average price of a gallon of gas rose 0.4 cent overnight to $3.105, according to AAA and the Oil Price Information Service. Oil futures have jumped 42 percent since late August.
On Monday, Energy Information Administration chief Guy Caruso predicted gas prices will rise another 20 cents a gallon by December to catch up with oil, according to Dow Jones Newswires. Gas prices peaked at $3.227 in late May. Diesel prices set a new record of $3.446 a gallon Tuesday, according to AAA and OPIS.
But those high prices appear to be cutting demand, the IEA said Tuesday in a report that clearly sent oil prices downward. [MORE]